Which One of the Following Statements Is Correct Concerning the One

question 39

Multiple Choice

Which one of the following statements is correct concerning the one stage approach being theoretically superior vis-a-vis the two-stage approach to security selection?

• A) The two-stage approach allows managers too much freedom to violate the risk-return preferences of the client.
• B) The two-stage approach does not allow managers to specialize in one particular asset class.
• C) The one-stage approach is superior because it uses all available information relevant to the construction of an optimal portfolio.
• D) The one-stage approach is preferred by most investment managers because it is simpler and cheaper to implement.